- American Iron Corp. is focused on acquiring and developing a portfolio of iron ore projects in Minnesota, including a high-grade iron-ore and tailings
- Additional iron ore projects under evaluation with large tonnage potential
- American Iron is comprised of experienced North American mining and management team
- 6 million post-consolidation Reliance shares to be issued on Closing, with additional 4 million Reliance shares to be issued thereafter in tranches upon attainment of certain development milestones
- Reliance to consolidate its shares on 5 for 1 basis and change its name to "American Iron Corp." on Closing
Pursuant to a definitive acquisition agreement (the "Agreement") between
Reliance and American Iron, American Iron has agreed to cause its
shareholders (the "AI Shareholders") to sell all of their shares of
American Iron (the "American Iron Shares") to Reliance (the
"Transaction") subject to and in accordance with, among other things,
the following terms:
a) Reliance has agreed to acquire the American Iron Shares by issuing a
total of 10 million Reliance common shares ("RI Shares") on a
post-consolidated basis (see below), as follows:
- 6 million RI Shares on closing of the Transaction (the "Closing");
- a further 2 million RI Shares subsequent to Closing upon American Iron publishing a mineral reserve of 30MT contained metal in respect of any Mineral Property; and
- a further 2 million RI Shares subsequent to Closing upon American Iron publishing a mineral reserve equivalent to 50MT at 50% iron (Fe) in respect of any Mineral Property;
b) Prior to the Closing, Reliance shall have completed a share
consolidation on the basis of five (5) existing RI Shares for one (1)
new RI Share (the "Consolidation"), and Reliance shall have changed its
name to "American Iron Corp." (the "Name Change");
c) Prior to the Closing, American Iron shall have acquired the Mineral
Properties and published a National Instrument 43-101 ("NI 43-101")
compliant technical report in respect of a Mineral Property or Mineral
Properties that will be its qualifying asset;
d) On or before the Closing, Reliance shall have completed a minimum
financing of $2 million at a price to be determined in the context of
the market (the "Financing"). The Financing may be by way of equity or
debt private placement or any other form of financing acceptable to the
parties.
e) Each of Reliance and American Iron shall have been satisfied of its
due diligence review of the other party, acting reasonably; and
f) On Closing, the Board of Directors and Officers of Reliance shall
consist of the following individuals:
- George Young - President, CEO and director
- Gary Lewis - non-executive Chairman and director
- Geoffrey Hill - director
- John Levings - director
- Ian Mitchell - director
- Dr. Michael Nelson - director
All of the above individuals, except for Geoffrey Hill, are current
directors of Reliance. Geoffrey Hill is an experienced company
director and the non-executive Chairman of ASX-listed Mount Gibson Iron
Limited, a leading producer of iron ore products from three operating
mines.
The Agreement contains additional terms and conditions that are
customary for transactions of a similar nature. The Closing date is
scheduled for April 30, 2014 or such later date as the parties to the
Agreement may agree in writing. The Transaction, Share Consolidation,
Name Change and Financing will be subject to the approval of the TSX
Venture Exchange and any necessary shareholder approval.
Reliance presently has a total of 122,152,099 RI Shares issued and
outstanding. Immediately upon Closing of the Transaction, the AI
Shareholders will hold 6 million post-Consolidation RI Shares
representing approximately 19.7% of the issued RI Shares on a
post-Consolidation basis (not taking into account any equity dilution
which may occur as a result of the Financing). Subject to the
fulfilment of the other conditions specified in (a) above, the AI
Shareholders may increase their shareholdings in Reliance to up to
approximately 29.0% of the total issued and outstanding RI Shares (not
taking into account any equity dilution which may occur as a result of
the Financing). The AI Shareholders are at arm's length to Reliance and
its current directors and officers. On Closing, no person, either
acting alone, jointly or acting in concert with any other person, shall
directly or indirectly hold or acquire more than 20% of the issued and
outstanding RI Shares (post-Consolidation).
American Iron has been evaluating the Mineral Properties targeted for
acquisition prior to the Closing. Many of these properties are
believed to contain materials that can be rapidly developed and placed
into operation. Potential products include high-grade iron ore
tailings, ore stockpiles, and conventional high-grade iron ores located
in Minnesota, USA. The Company has submitted its first lease
application and has obtained permits for systematic sampling in
connection with the preparation of a NI 43-101 compliant technical
report covering a property located near Hibbing, Minnesota, with high grade iron tailings and ore stockpiles. Sampling has been
completed on the property, and the technical report is in progress, and
will be filed upon its completion and the granting of a lease on the
property, which the Company hopes will occur in the next few weeks.
The Company is aiming to provide rapid growth and cash flow from
properties being evaluated for acquisition to drive a growth strategy
for shareholders.
The use of the term "iron ore" throughout this News Release is only
intended as a geological description and does not imply that any
economic viability has been determined.
American Iron is also assessing a number of properties with potential
for large tonnage conventional iron ore discovery and production in the
Midwestern states of the USA.
Reliance's non-executive Chairman, Gary Lewis, commented:
"The proposed acquisition of American Iron Corp. is the result of nearly
twelve months of negotiation and due diligence and is an excellent
outcome for Reliance. For some time, we have been assessing a number of
project opportunities and the Board believes that this transaction
presents the best potential to deliver optimum returns for our
shareholders.
It is clear that the US economy is in a recovery and growth phase and
having exposure to this market presents significant upside for
Reliance.
American Iron's targeted assets are anticipated to be highly prospective
for near-term, low-cost mine development and they are located in a
favourable mining jurisdiction with access to domestic and
international shipping routes. The region hosts a number of other large
iron ore projects, which will provide American Iron with consolidation
opportunities, and these are now being assessed for acquisition.
Geoffrey Hill's appointment to the Board on closing is a great addition.
Geoff is a seasoned company director and brings considerable skills and
understanding of the iron ore sector to the Company. These will be
invaluable as we advance the development of the iron ore portfolio of
assets. He is responsible for bringing this transaction to Reliance and
is committed to realising its full potential value."
Cautionary note: Until a mineral resource has been estimated and a
project has been positively assessed for its economic feasibility,
there is no certainty that any of the proposed operations will be
economically viable.
While Reliance is working to complete the Transaction, it is also
actively investigating options to obtain maximum benefit from its
existing Indonesian assets. Shareholders will be notified at an
appropriate time on the outcome of these efforts.
Reliance will update shareholders on the progress of the Transaction and
on American Iron's short-term milestones.
On behalf of the Board of Directors of Reliance
Gary Lewis
Non-executive Chairman and Director
Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words "believes," "may," "plans," "will," "anticipates," "intends," "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions. Forward-looking information in this news release include statements about the proposed Transaction, proposed management restructuring, American Iron's proposed acquisition of its Mineral Properties and the Company's future plans, objectives and business strategy.
In connection with the forward-looking information contained in this news release, the Company has made numerous assumptions, regarding, among other things, the assumption that the parties will complete the principal conditions for completion of the Transaction, including but not limited to the Company's completion of the Financing and American Iron's acquisition of the Mineral Properties; the receipt of necessary shareholder and regulatory approvals; and the assumption the Company will continue as a going concern and will continue to be able to access the capital required to advance its projects and continue operations. While the Company considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. In addition, there are known and unknown risk factors which could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: the inability of American Iron to acquire the Mineral Properties; the possibility that the Financing will not be completed; and the possibility that the Company may not be able to continue as a going concern in the near term.
All forward-looking information herein is qualified in its entirety by this cautionary statement, and the Company disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
SOURCE Reliance Resources Ltd.
Copyright CNW Group 2014
Anzeige
